I’m a law nerd. I admit it. While storms wreak havoc throughout the country, several thoughts run through my head. Of course, I hope everyone will remain safe and homes are not lost; but I also wonder what will happen with all those contracts that will go unfulfilled because of the harsh weather conditions. We all know about Dorothy’s adventure thanks to a tornado–but did the tornado cost Aunt Em the farm? Hopefully, companies adversely impacted by the storms have strong force majeure clauses in place.
A force majeure provision anticipates circumstances outside of a party’s control that prevent it from fulfilling its responsibilities under the agreement. Force majeure clauses sometimes list several categories or events that could impact a party’s ability to perform. Common in this list is “Acts of God,” which include natural disasters, such as hurricanes
- Read the Contract
First, you should read the agreement to see if it even includes a force majeure clause. If there is a clause in place, read its specific terms so you know what is exactly covered and what actions are required. Also, what are the other party’s rights if the clause is invoked? This information is important and should guide your next steps.
- Search for an Alternative
Typically, a party seeking to invoke a force majeure clause must show there is not alternative means for performance. If performance simply becomes more costly because of the outside conditions, the party will likely not be able to show it was unable to perform under the contract’s terms.
- Give Notice
Whenever you’re unable to perform under the terms of an agreement, you should provide immediate notice in accordance with the agreement’s notice requirements. I can’t tell you how many times I see a relationship between parties go awry simply because of poor communication.
The parties should collaborate to assess how to minimize damages. This is where creative problem solving can be helpful. By working together with the other party, parties can seek to minimize risk and avoid costly legal battles.
Remember: it only takes one catastrophic event to destroy all your hard work an place your business in jeopardy. Taking the precaution of including a force majeure clause in every contract you enter is essential and communicating with your contracting party is integral.
If you’re facing a situation where you may have to invoke such a clause or entering a new agreement and need to make sure you include the essential provisions, the Law Firm of Alejandro Perez assists businesses draft, review, and negotiate contracts that meet their specific business needs and meets their goals. Please call us at 602.354.2833 or firstname.lastname@example.org for more information.